A month has gone by since the last earnings report for Agilent Technologies (
A Quick Quote A - Free Report) . Shares have added about 2.4% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Agilent due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Agilent's Q4 Earnings Beat Estimates, Revenues Up Y/Y
Agilent Technologies reported fourth-quarter fiscal 2020 earnings of 98 cents per share, beating the Zacks Consensus Estimate of 91 cents. Further, the bottom line improved 10.1% year over year and 25.6% sequentially.
Revenues of $1.48 billion were up 8.5% on a reported basis and 6% on a core basis. Also, the top line surpassed the Zacks Consensus Estimate of $1.40 billion and increased 17.6% from the fiscal third quarter. This was driven by strong growth across all regions served and the three businesses. We note that region wise, Americas, Asia-Pacific and Europe accounted for 38%, 35%, and 27% of revenues, respectively, for the reported quarter. By type, 57% of revenues were generated from Consumer Services Informatics. Instruments accounted for the remaining 43% of revenues. In terms of major markets, Analytical Laboratory generated 85% of fiscal fourth-quarter revenues. Dx & Clinical accounted for the remaining 15%. Segment Top-line Details
Agilent has three reporting segments — Life Sciences & Applied Markets Group (LSAG), Agilent Cross Lab Group (ACG), and Diagnostics and Genomics Group (DGG).
In the reported quarter, LSAG was the largest contributor to total revenues. The segment accounted for $671 million or 45% of its total revenues, up 8% year over year. This was driven by improving conditions across geographies, led by growth in Food and Pharma. Also, strength in Cell Analysis and Mass Spectrometry aided the results. Revenues from ACG were $518 million, accounting for 35% of total revenues. Also, the top line improved 9% year over year, driven by improving lab operating environment. Also, growth was broad across major markets and regions served. DGG revenues increased 9% year over year to $294 million, accounting for the remaining 20% of total revenues. The segment was driven by strong Pharma market, including continued strong NASD ramp. Operating Results
For the fiscal fourth quarter, LSAG gross margin contracted 150 basis points (bps) on a year-over-year basis to 59.2% due to lower volumes.
DGG gross margin contracted 310 bps on a year-over-year basis to 50.9%. ACG gross margin also contracted 80 bps to 51.8%. Research & development and selling, general & administrative expenses were $101 million and $345 million, up 1% and 5% year over year, respectively. Operating margin for the fiscal fourth quarter was 24.9%, down 20 bps on a year-over-year basis. Segment wise, operating margin for the LSAG segment contracted 50 bps year over year to 24.8%. DGG segment operating margin expanded 60 bps on a year-over-year basis to 20.3%. ACG operating margin was 27.7%, which contracted 30 bps from the year-ago quarter. Balance Sheet
As of Oct 31, 2020, Agilent’s cash and cash equivalents were $1.44 billion, up from $1.36 billion in the prior quarter.
Accounts receivables were $1.04 billion at fiscal fourth quarter-end, up from $930 million at fiscal third quarter-end. Further, total debt (short term + long term) was $2.4 billion for the reported quarter compared with $2.3 billion in the prior quarter. Outlook
Agilent provided guidance for the fiscal first quarter and 2021.
For the fiscal first quarter, the company expects revenues in the range of $1.42-$1.43 billion, indicating core growth of 3.5-4.5% year over year. Earnings per share are expected in the range of 85-88 cents. For fiscal 2021, Agilent maintained its revenue guidance in the range of $5.6-$5.7 billion, indicating core growth of 4-6% from a year ago. Non-GAAP earnings are projected in the range of $3.57-$3.67 per share. How Have Estimates Been Moving Since Then?
It turns out, estimates revision flatlined during the past month.
Currently, Agilent has a nice Growth Score of B, though it is lagging a bit on the Momentum Score front with a C. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Agilent has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.